Appearing at the trial was Joseph Brncic, President, or sometimes known as Chief Justice, of the Supreme Court of the People's Republic of Croatia.
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The witness testified that in the middle of December, 1954, plaintiff George Philips came to the Zagreb office of the witness together with a Yugoslav by the name of Ivekovic. Also present was another judge of the Supreme Court of Croatia. Philips and Ivekovic discussed with the witness and the other judge the question of whether the Supreme Court of Croatia would issue a decision concerning the Philips' Croatian property. Philips and Ivekovic showed the judges documents evidencing action by a district commission which took the plaintiffs' land under the Agrarian Reform Act of Yugoslavia. Philips and Ivekovic desired to have the district commission's decision annulled and a decision entered by the Supreme Court of Croatia that the land had been taken under a later law. Witness Brncic testified that he advised George Philips that it was not possible to annul the Agrarian Reform Law action and issue a Supreme Court decision. The conversation was carried on in both the Croatian and English language and, according to the witness, George Philips understood the witness. Philips and Ivekovic were with the two judges of the Supreme Court of Croatia for a period of not more than 10 to 20 minutes and it might even have been a lesser time. The witness testified that the other judge present did not tell George Philips that the latter would have to go to a lower court in Croatia in order to obtain an order and that, depending upon the nature of that decision, it might come to the Supreme Court of Croatia for final decision. Following George Philips' departure from witness Brncic's offices in 1954, the witness never again saw George Philips until the occasion of this trial when he identified him in the courtroom.

The Foreign Claims Settlement Commission in each final decision treated in detail with the Croatian Supreme Court decision which, among other things, provided that the earlier decision of the District Commission for Agrarian Reform and Colonization was vacated; that the real property mentioned in the decision of the District Commission was nationalized under the Law of Nationalization of April 28, 1948; and that the County Court as a land recording court was directed to make the required entries in the land records. Final decision No. 1504 then stated: "[On] the basis of all the evidence and data now [December 30, 1954] of record, the Commission finds that the [Philips] property * * * was not taken by the Government of Yugoslavia on July 23, 1946 * * * but was in fact taken by the Government of Yugoslavia on April 28, 1948 as to Philip Philips' interest in the property and on May 3, 1948 as to Adolph Philips' interest in the property, pursuant to the Second Nationalization Act of April 28, 1948."
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Having reached that conclusion, the Foreign Claims Settlement Commission made an award in each final decision and certified it to the United States Treasury on December 30, 1954, "for payment of the award in accordance with the provisions of Section 8(c) of the International Claims Settlement Act of 1949."

The Secretary of the Treasury having failed to pay the awards, this action was instituted by plaintiffs seeking relief in the form of a mandatory injunction to require the defendant Secretary of the Treasury to pay to the plaintiffs the awards certified. Plaintiffs contend that the payment of the awards by the defendant Secretary of the Treasury would be only a ministerial act and that, therefore, it should be compelled by this Court through the exercise of its equity powers.

Defendant asserts that the Croatian Supreme Court decision is false, fictitious or fraudulent and the filing of that document worked a fraud on the Foreign Claims Settlement Commission. The awards, according to the defendant, were vitiated by the fraud and the plaintiffs are without clean hands and that they are therefore estopped from obtaining the equitable relief they seek here.

I find the purported Croatian Supreme Court decision to be a false document and that the presentation to the Foreign Claims Settlement Commission of what was represented to be a certified copy of an authentic decision of the Croatian Supreme Court worked a fraud on the Commission. I make this false document finding on the testimony of the witness Brncic, the Chief Justice (or President) of the Supreme Court. Although the plaintiffs argue, in their Post-Trial Brief, that Brncic was evasive and contradictory in his testimony, I did not find him to be so. I found him to be a credible witness.

Having found that a fraud was worked upon the Foreign Claims Settlement Commission by filing with it a false document, I conclude the relief sought here must be denied the plaintiffs. Applicable here is the equity maxim: "he who comes into equity must come with clean hands." And that is so whether this action be considered as a suit in equity for a mandatory injunction or an action seeking the legal remedy of mandamus. In either instance equitable principles control the issuance of the writ or order. Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 54 S. Ct. 146, 78 L. Ed. 293 (1933); Duncan Townsite Co. v. Lane, 245 U.S. 308, 311-312, 38 S. Ct. 99, 62 L. Ed. 309 (1917).

That the wrongful conduct of representing to the Foreign Claims Settlement Commission that a decision favorable to plaintiffs' claim has been made by the Supreme Court of Croatia worked a fraud on that agency is obvious from reading the final decisions of the Commission. Critical to the claims of plaintiffs was the nationality status of Philip Philips and Adolph Philips on the dates that their respective interests in the property in Yugoslavia was taken by the Yugoslav Government. The executive agreement
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between that Government and the United States provided that claims were to be paid out of the moneys transferred to the United States by Yugoslavia (the Yugoslav Claims Fund) to nationals of the United States "at the time of nationalization or other taking" of their property by Yugoslavia. The Foreign Claims Settlement Commission's proposed decisions found that Philip Philips and Adolph Philips were nationals of Yugoslavia when their properties were taken pursuant to the Law on Agrarian Reform and Colonization in 1946 prior to the dates that Philip Philips and Adolph Philips became citizens of the United States. Thus, if the proposed decisions had become final, the Philips brothers would have been entitled to no award.
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But the final decisions did make awards to the successors of Philip Philips and Adolph Philips because the false document purporting to be a decision of the Supreme Court of Croatia held that, by the operation of a later Yugoslav law, the Philips properties were taken on dates that Philip Philips and Adolph Philips were United States citizens.

The fact that in December, 1954, documents in addition to the fraudulent Croatian Court decision were presented to the Commission on behalf of plaintiffs does not alter my conclusion. As in Hazel-Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 246-247, 64 S. Ct. 997, 88 L. Ed. 1250 (1944), whether or not the false document was the primary basis for the Commission's final decisions, it did impress the Commission as is evident from those decisions. Plaintiffs thought the false document material or it would not have been presented to the Commission. "They are now in no position to dispute its effectiveness." Id. at 247, 64 S. Ct. at 1002. The false Croatian Supreme Court decision was used here for the same fraudulent purpose as the spurious publication in Hazel-Atlas. But as said in the latter case: "The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud." Id. at 246, 64 S. Ct. at 1001.

While there is no evidence that plaintiffs Elizabeth De Gaster and Joseph Philips participated in or were informed of or otherwise knew of the fraud worked upon the Commission by their co-plaintiff and brother, George Philips, they, nevertheless, may not benefit from such fraud. At the time the December 30, 1954 final decisions were made by the Foreign Claims Settlement Commission, Barbara Philips was the executrix of the estates of Philip Philips and Adolph Philips. It was while Barbara Philips as executrix was asserting the claims of the estates of Philip Philips and Adolph Philips that George Philips, acting for the estates, perpetrated the fraud on the Commission. After the final decisions were made by the Commission, the executrix of the estate died and the plaintiffs here, as successors in interest, stand in the same relationship as the executrix to the claims and the equities with respect to them. Lamb v. Cramer, 285 U.S. 217, 219, 52 S. Ct. 315, 76 L. Ed. 715 (1932). Thus the fraud that induced the final decision continues to taint the awards. Apposite here is the statement of the Court in Ford v. Buffalo Eagle Colliery Co., 122 F.2d 555, 563 (C.A.4, 1941):

True it is that all the appellants have not been found guilty of fraud in the sale of their stock to the Colliery Company. But the bar of the clean-hands maxim is not employed for the punishment of wrongdoers; rather, it is introduced to protect the court of equity and the party defendant from having the powers of the court used in bringing about an inequitable result in the particular litigation before it. * * * Thus, the appellants, though all are not guilty of unconscionable conduct, cannot here claim the benefit of a fraud perpetrated by one or two of their number. * * *

The plaintiffs assert that this Court must disregard the "clean hands" equitable principle because they have not been indicted and convicted under 18 U.S.C. § 1001. They seek support for this position in section 4(e) of the International Claims Settlement Act of 1949, as amended (22 U.S.C. § 1623(e)). There it is stated:

The plaintiffs read that section as providing that they cannot be deprived of the payment of the awards made in the final decisions by the Foreign Claims Settlement Commission until they are first found guilty of committing the crimes defined in 18 U.S.C. § 1001 and thereafter have their rights to the awards forfeited. I do not so construe the statute. I understand the quoted section to mean that parties guilty of using false documents may have the fruits of their fraud declared forfeited as well as be criminally punished. I do not read the statute as declaring that a judgment of criminal guilt is a prerequisite to a forfeiture. To me the statute would have to be more explicit to make it, as the plaintiffs contend, the exclusive remedy for a forfeiture and thus abrogate "the right which the sovereign otherwise has to pursue common law remedies against tortfeasors in its own courts." United States v. Borin, 209 F.2d 145, 148 (C.A.5, 1954).
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Moreover, by applying the equitable "clean hands" maxim here and thus denying the plaintiffs the equitable relief they seek, this Court does not declare forfeited the awards made by the Foreign Claims Settlement Commission in its December 30, 1954 final decision. This Court simply shuts its doors to the plaintiffs by refusing to interfere on behalf of them, to acknowledge their rights, if any, and to award them any remedy. Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245, 54 S. Ct. 146, 78 L. Ed. 293 (1933).
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An order will be entered dismissing plaintiff's complaint.

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